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Neither the Senate-passed or House-passed tax plan adequately anticipates future cost growth. Either plan would leave legislators with very difficult future choices. Shouldn’t legislators adjust their tax plans to more realistically plan for future cost growth?
A look at this year's Tax Freedom Day map yields interesting information on how the Kansas tax burden compares to other states and should give policymakers something to think about in the final days of the 2013 legislative session as they work to set future tax policy.
The Kansas Senate and Kansas House have each passed a tax plan to raise new revenue to narrow a wide gap between income and expense in the fiscal 2014 budget. The tax plans aim to solve an immediate problem, but ironically, both plans also contain provisions that could easily cause new budget problems in future years.
The Kansas Legislature must produce a budget for fiscal year 2014, but do legislators also need to pass a tax plan? For this legislative session the answer is “no.” However, until revenue and expenditures match up, the financial problems that Kansas policymakers face will not go away.
Even during the Great Recession, State General Fund revenue did not fall as far or as fast as it is expected to between fiscal year 2012 and fiscal year 2014.
Arguably the current Legislature is the most conservative in a very long time and faces a budget situation in which current spending levels dramatically exceed expected income. If this group of legislators find themselves unable to balance the budget with cuts, perhaps that means they have found the floor for spending and should now concentrate on raising enough revenue to support at least that minimum level of spending.
The state must have new revenue to balance the budget, but not all of the new revenue needs to come from higher taxes. Transferring money to the State General Fund or stopping planned transfers out counts as revenue. The governor and Legislature are relying heavily on these transfers to make the fiscal year 2014 budget work.
The elimination of a major tax may help produce economic growth or new jobs in Kansas — but how will that growth translate into adequate funding to pay for key government services?
As Kansas policymakers work to produce a fiscal year 2014 budget, they face a huge gap between expected revenue and expenditures. The official estimate for State General Fund (SGF) revenue in FY 2014 totals $5.464 billion, but SGF expenditures currently exceed that amount by more than $700 million. Can deep spending cuts close most of the gap? It’s not likely, and here’s why.
The Governor’s Budget Report contains a chart packed with information that helps sort out whether state funding for education has gone up or down. The chart shows student population, budget per pupil and the amount of state spending from all sources, including federal Recovery Act funds.